Economic (dis)integration in the presence of evolutionary learning

Abstract

We use a two-factor, two-sector model to study the effects of economic integration and its reversal in the presence of input-generated external economies in one of the sectors. The equilibrium selection problem that arises is solved by applying a simple trial-and-error learning rule. Economic integration can take individual economies ridden with coordination failures to better equilibria, i.e., can solve the coordination problem. We show that integration (and disintegration) may generate cycles in wages, rentals and the sectoral allocation of factors. Copyright Springer-Verlag Berlin/Heidelberg 2004Economic (dis)integration, Input-generated externalities, Coordination failures, Learning rule, Simulation,

The role of economic integration and disintegration in the post-Soviet space: A quantitative analysis

“…Curiously enough, both the coefficient of variation and the standard deviation show that the admission of Uzbekistan to the EurAsEC would have led to the con- 3 This is to a great extent due to a general decline in the average standard of living in Commonwealth countries as a result of the accession of a relatively poorer country. We underline that these results were obtained for unweighted indicators; the use of weighting would have yielded a different result because the richest country in the EurAsEC (Russia) is also the biggest.…”

“…-"market integration," reduction of transborder transaction costs in order to boost the efficiency of the economy, as well as the initiation of the effects of "evolutionary learning" of agents [3];…”